So, how did Spring 2009 turn out? First off, let me state that I'm reporting on the areas I've been following closely (see below). But, this spring seems to be marked by two interesting, and traditionally contradictory trends: (1) increased sales volume w/decreased days on market, and (2) decreasing prices.
Interestingly enough, I've seen quite a few houses sell within one week, if not the first day! This is quite a turn-around from the recent past, and might remind some of the days of bidding wars and such. But, this doesn't seem to lead to increasing prices. So, what's up?
My hunch is that affordability is driving sales volume. Affordability, in the case, is due to declining prices, unusually low mortgage rates, and maybe that $8k tax credit (although I'm not sure how many qualify). Anecdotedly, I've seen an unusual number of contracts fall through, only to come back on the market later.
Enough blabber, time for data.
Types of houses:
First let me define the types of houses I'm looking at and the geographic areas. Houses are 4+ bedrooms, single-family homes, no condos or townhouses, 2000+ sq ft (this is above ground, does not include basement), and a price range from $400k-$1.25 million. Data has been gathered from the Washington Post, Fairfax County database, RedFin, and Frankly MLS. All data confirmed against the Fairfax County database. Does not include seller subsidies.
Geographic Areas
"Franklin Farm" Perhaps misnamed in the graph, but this areas represents zip code 20171, and may overlap with a few other zip codes. This includes Franklin Farm, Oak Hill, parts of Herndon, and the western edge of Oakton.
"Oakton" This mostly includes 22124, and only includes homes that go to Oakton Highschool (sorry Reston and South Lakes!). This also includes the western part of Vienna near Hunter Mill and the eastern part of Herndon (20171) near Fox Mill.
Normalization Method
I control for 'quality' by comparing the prices to the 2006 tax assessment. Some can quibble with this, but on the macro level I can not think of a reason why this would interact with the mix of houses sold. Short sales and foreclosures included are included in the data, but not the 'sale' back to the bank. I exclude houses that are blatantly mis-assessed (i.e. a house with an addition that doubles the square footage, but is not reported). I also exclude tear-downs or houses that are badly in need of repair.
Sales Volume
First off, because both of these graphs are 3-month moving averages, and there is some latency in data reporting, so the last two data points should be ignored.
The tentative conclusion is that, although volumes have increased, we really only saw a spring bounce for Oak Hill and not Oakton. Volumes also seem to be down compared to last year.
Why didn't Oakton see the same bounce as Oak Hill? The two areas are very different. Oakton has large treed lots (.5 acre or more), and many of the houses back up to parkland. Oak Hill is suburban, with smaller lots of 1/5th to 1/4 acre size. Oakton is also a little closer to DC and metro stops. Typically, the same house will sell for much less in Oak Hill (25% discount? just a guess).
Prices
How did prices fair in both areas? In a nut shell, they are down, with Oak Hill declining at a quicker rate than Oakton (not surprising). All graphs can be clicked on to enlarge them in a separate window.
In Conclusion
Despite all of the incentives (cheap mortgage rates, etc.), this spring has been a bit of a fizzle. Price and affordability drives home sales. Keep in mind that the cheap mortage rates were not available for conforming jumbo (loans > $417k and < $7xx k), which undoubtedly hurt Oakton. Notice in this next graph that houses > $800k are selling for a greater discount (data from FranklyMLS, and includes seller subsidies):
